Fox Misleadingly Pushes Outrage Over Insurance Plan Changes

Fox News has stoked outrage over the plan changes in the individual health insurance market, charging Obama with "government malpractice" and calling him a liar for supposedly not informing people that plans would change. But Fox's hyperbolic attacks ignore the fact that these changes are not only common in the individual market, but also that the administration announced them years ago.

Fox News' Peter Johnson,Jr.: Millions Will Lose Healthcare Due To ACA, And Obama Should Be Charged With "Malpractice." Fox News legal analyst Peter Johnson, Jr., charged Obama with "government malpractice" for not disclosing the effects the Affordable Care Act (ACA) would have on individual insurance plans, and continued to push the idea that changes in insurance plans were kept secret from the public:

STEVE DOOCY (co-host): Now that it's clear that the White House knew millions of us would eventually lose our health care, is the Obama administration guilty of government malpractice?

[...]

JOHNSON: It is government malpractice and it's lack of informed consent of the governed. Talk about informed consent, a legal, a medical term that people should understand. That means a person's agreement to allow something to happen, such as surgery, that is based on a full disclosure of facts needed to make the decision intelligently. [Fox News, Fox & Friends, 11/6/13]

Fox's Tucker Carlson: Obama "Knowingly Lied And He Did So For Political Expedience."Fox & Friends weekend host Tucker Carlson claimed that Obama "knowingly lied and he did so for political expedience" and that the "real truth" was that the Obama may have dishonestly influenced the 2012 election results by misleading the American people:

CARLSON: If people had known that millions were going to lose their existing coverage under Obamacare, immediately under Obamacare, Obamacare neverwould have passed. If Romney had known this and been able to prove it during the last election, would Obama have been reelected? I don't know, it's an open question. This goes to the very center of Obama's domestic program. This is not some parenthetical aside he lied about. This is the core of his whole program.

[...]

He didn't misspeak, he knowingly lied and he did so for political expedience. [Fox News, America's Newsroom, 11/6/13[1]]

Fox's Mary Katharine Ham: Obama Administration Was "Lying, Period." On the November 4 edition of The O'Reilly Factor, Fox contributor Mary Katharine Ham claimed that the administration was "lying, period" about changes to individual insurance plans, pressing the point even over host Bill O'Reilly's skepticism. [Fox News,The O'Reilly Factor, 11/4/13[2]]

Years Ago, The Administration Announced That Many Individual Policies Would Be Changed

HHS Press Release In June 2010 Acknowledged Many Individual Plans Would Change. A June 2010 press release from the Department of Health and Human Services explicitly stated that some individuals would face changes to their plans:

The 17 million people who are covered in the individual health insurance market, where switching of plans and substantial changes in coverage are common, will receive the new protections of the Affordable Care Act sooner rather than later. Roughly 40 percent to two-thirds of people in individual market policies normally change plans within a year. In the short run, individuals whose plan changes and is no longer grandfathered will gain access to free preventive services, protections against restricted annual limits, and patient protections such as improved access to emergency rooms. [U.S. Department of Health and Human Services, 6/14/10[3]]

In June 2010, Sec. Sebelius Explained The Conditions That Would Cause Plans To Change To Comply With ACA. On June 14, 2010, Health and Human Services Secretary Kathleen Sebelius announced the conditions that would cause an individual insurance plan that was in existence by the date the law was enacted to change to comply with the ACA's requirements: administration's grandfathering regulations, saying "if health plans significantly raise copayments or deductibles, or significantly reduce benefits, for example just stop covering treatments like HIV/AIDS or cystic fibrosis, they lose their grandfather status, and their customers then have the full set of consumer protections as new plans. Together, these rules mean exactly what President Obama told the American people would be done; under the Affordable Care Act, if you like your doctor and your plan, you keep it." [U.S. Department of Health and Human Services, 6/14/10[4]]

NY Times In 2010: Administration Acknowledged That Some "Might Face Significant Changes In The Terms Of Their Coverage."The New York Times reported in June 2010 that the administration acknowledged that some "might face significant changes in the terms of their coverage":

In issuing the rules, the administration said this was just one goal of the legislation, allowing people to "keep their current coverage if they like it." It acknowledged that some people, especially those who work at smaller businesses, might face significant changes in the terms of their coverage, and it said they should be able to "reap the benefits of additional consumer protections."

The law provides a partial exemption for certain health plans in existence on March 23, when Mr. Obama signed the legislation. Under this provision, known as a grandfather clause, plans can lose the exemption if they make significant changes in deductibles, co-payments or benefits.

About half of employer-sponsored health plans will see such changes by the end of 2013, the administration says in an economic analysis of the rules.

The rules allow employers and insurers to increase benefits. But, in a summary of the rules, the administration said, "Plans will lose their grandfather status if they choose to make significant changes that reduce benefits or increase costs to consumers." [The New York Times, 6/14/10[5]]

Insurance Companies Frequently Discontinue Policies, And Cancellations Do Not Mean Lost Coverage

CHIR: "Having An Insurance Company Discontinue An Insurance Policy Is Not Anything New." According to Georgetown University's Center on Health Insurance Reforms (CHIR), most consumers have year-long policies with health insurance companies that are often changed at the end of the policy year, and "in most states insurers are allowed to increase premiums, increase cost-sharing, and/or reduce the scope of benefits covered." CHIR further clarifies:

Having an insurance company discontinue an insurance policy is not anything new. And actually, the term "policy cancellation" is a misnomer. Generally, an individual health insurance policy is sold via a 12-month contract between the insurer and the consumer. At the end of that contract period, the insurer has the option to discontinue or change that policy - nothing in federal law changes that. Current policyholders are not having their current policy cancelled - rather, the insurance company is exercising its option to discontinue the policy at the end of the contract year.

The Health Insurance Portability and Accountability Act (HIPAA), a federal law passed in 1996, provides that individual policies are "guaranteed renewable" at the end of the 12-month contract, but in most states insurers are allowed to increase premiums, increase cost-sharing, and/or reduce the scope of benefits covered. And, more often than not, insurance companies have done one or all of these things to policyholders. It is part of the reason individual health insurance is often called "swiss cheese" coverage compared to employer-based plans - because it's full of holes. Under HIPAA, an insurer could also decide to discontinue a policy, but if it did so, the law said it must provide the policyholder with at least 90 days notice, must offer the policyholder another new policy as an alternative, and has to treat its policyholders the same, regardless of their health status. [The Center on Health Insurance Reforms, 10/28/13[6]]

Interim Final Rule On ACA, June 2010: Administration Estimates Some Plans Would Be Changed Due To Regular Turnover In Insurance Markets. The interim final rule published in the Federal Register in June 2010 shows that the Obama administration based their estimates on health care plan changes on research that showed the individual insurance market experiences heavy annual turnover:

The market for individual insurance is significantly different than that for group coverage. This affects estimates of the proportion of plans that will remain grandfathered until 2014. As mentioned previously, the individual market is a residual market for those who need insurance but do not have group coverage available and do not qualify for public coverage. For many, the market is transitional, providing a bridge between other types of coverage. One study found a high percentage of individual insurance policies began and ended with employer-sponsored coverage. More importantly, coverage on particular policies tends to be for short periods of time. Reliable data are scant, but a variety of studies indicate that between 40 percent and 67 percent of policies are in effect for less than one year. Although data on changes in benefit packages comparable to that for the group market is not readily available, the high turnover rates described here would dominate benefit changes as the chief source of changes in grandfather status.

While a substantial fraction of individual policies are in force for less than one year, a small group of individuals maintain their policies over longer time periods. One study found that 17 percent of individuals maintained their policies for more than two years, while another found that nearly 30 percent maintained policies for more than three years.Using these turnover estimates, a reasonable range for the percentage of individual policies that would terminate, and therefore relinquish their grandfather status, is 40 percent to 67 percent.These estimates assume that the policies that terminate are replaced by new individual policies, and that these new policies are not, by definition, grandfathered.[Federal Register,6/17/10[7], emphasis added]

CBO: "Because Of Relatively High Turnover" In Individual Market, Few Plans Would Not Be Changed By 2016. In a November 2009 letter to former Senator Evan Bayh, the Congressional Budget Office (CBO) explained that the change in many health care plans can be attributed to the naturally high turnover in the individual market:

Moreover, if they wanted to, current policyholders in the nongroup market would be allowed to keep their policy with no changes, and the premiums for those policies would probably not differ substantially from current-law levels. But because of relatively high turnover in that market (as well as the incentives for many enrollees to purchase a new policy in order to obtain subsidies), CBO and JCT estimate that relatively few nongroup policies would remain grandfathered by 2016. [Congressional Budget Office, 11/30/09[8]]